To regain their exclusivity and cope with rising production costs, fashion houses are increasing their prices. Let’s break down the main reasons behind this.
Luxury brands have a particular target audience
Luxury brands were created with the wealthiest people in mind. Over time, however, many have become more affordable for people outside of this bracket. This is thanks to discount stores selling their items and reselling them on sites and apps like eBay and Gumtree.
Anxious to widen the gap again, brands are increasing their prices to target only their original market.
The brands that decided to raise prices and eliminate markdowns over the past two years include Michael Kors, Burberry and Prada.
If you own a piece of designer jewelry or a high-value watch, check to see if it has been appreciated and make sure you have insurance that can protect it.
Rising production costs and inflation
There is also an argument that the cost of production has increased in designer items, and this is reflected in the price. Factors such as material sourcing and shipping have all impacted the prices luxury retailers charge their customers.
Along with other luxury brands, Louis Vuitton announced plans to raise prices earlier this year, saying this had to take into account changes in production costs, raw materials, transport and inflation. .
Luxury customers are still ready to keep spending
Another reason is that while the average member of the public will feel the pressure of the cost-of-living situation, those with a little more to spend still seem willing to afford luxury items.
Brands know they can keep raising prices because they will always have a percentage of the population that can afford their products.
In 2021, the luxury fashion market rebounded significantly from the pandemic, with market revenues in the UK surpassing pre-pandemic levels in 2019. As Statista data showsturnover should grow steadily between now and 2025, particularly for prestige cosmetics and perfumes as well as for luxury leather goods.
Although the cost of living is rising and price hikes on non-essential luxury items might seem counterintuitive, brands seem to be in a strong position to do just that. Higher prices are a way for brands to retain their exclusivity. And with their income expected to increase over the next few years, it’s something they can afford to do.